Question

question 5
maddalous international, inc. produces and sells a single product. the product sells for $160.00 per unit, and its variable expense is $46.40 per unit. the company’s monthly fixed expense is $219,248
required:
what’s the monthly break - even in total dollar sales?

Explanation:

Step1: Calculate Contribution Margin per Unit

Contribution Margin per Unit = Selling Price per Unit - Variable Expense per Unit
\(= 160 - 46.40 = 113.60\) dollars per unit

Step2: Calculate Contribution Margin Ratio

Contribution Margin Ratio = \(\frac{\text{Contribution Margin per Unit}}{\text{Selling Price per Unit}}\)
\(= \frac{113.60}{160} = 0.71\) (or 71%)

Step3: Calculate Break - Even Dollar Sales

Break - Even Dollar Sales = \(\frac{\text{Fixed Expenses}}{\text{Contribution Margin Ratio}}\)
\(= \frac{219248}{0.71} = 308800\) dollars

Answer:

The monthly break - even in total dollar sales is \(\$308800\).